Post drilling clean-ups rare in Louisiana

Jul. 16, 2014
|

by David Hammer and Mike Perlstein , WWL-TV, New Orleans

by David Hammer and Mike Perlstein , WWL-TV, New Orleans

NEW ORLEANS â?? Louisiana landowners and big oil companies have been locked in a legal stalemate for the last decade over how to fix environmental damage caused by oil and gas operations across the state.

Both sides claim they are highly motivated to clean up damage to Louisiana's delicate marshlands and underground aquifers, but New Orleans WWL-TV has taken a closer look at so-called "legacy lawsuits" and found that full-scale cleanups are hard to come by.

The legacy lawsuits have become a billion-dollar problem in Louisiana, but one that rarely gets solved because powerful legal and political forces create a framework in which cleaning the environment is rarely beneficial to either side, WWL has found.

Landowners across Louisiana have filed more than 360 legacy suits against oil companies since the 1990s, and more often than not, landowners have won judgments or settlements that paid tens of millions of dollars for damages caused during half a century of drilling and mineral production activities on their property.

Some of the money is awarded for cleanup, but the remediation record has been woeful. Often, oil companies try to deny liability, and, at times, they fight among themselves over which company is actually responsible for the damages.

The landowners, meanwhile, often try to delay cleanup until after a full trial is held or a settlement is reached because they want all the evidence intact to pursue larger awards.

Judicial limbo?

Only 12 of 137 properties with state-verified contamination have been cleaned up to state standards, according to a database kept by the Office of Conservation, a department within the state Department of Natural Resources, which regulates on-shore oil and gas activities.

That has led to some of the most passionate accusations and recriminations on the Louisiana political landscape, with landowners blaming oil companies and lax state oversight on one side, and industry and tort reform groups accusing trial lawyers of hijacking justice on the other.

"Their big thing is, 'We want cleanups,'" said John Carmouche, whose Baton Rouge law firm represents by far the most landowners in legacy cases. "You know how many times I've gotten a call (from oil companies) prior to a lawsuit, during a lawsuit, (saying) 'I'm going to clean it up'? One."

"The plaintiffs' lawyers don't want us to clean it up," said Don Briggs, president and founder of the oil industry's lobbying arm, the Louisiana Oil and Gas Association. "Why would they want us to clean it up? It's not about that. â?¦ It's about money."

Industry and lawsuit reform groups, such as the American Tort Reform Association, have called Louisiana a "judicial hellhole" because of these cases. Melissa Landry, executive director of the tort-reform advocacy group Louisiana Lawsuit Abuse Watch, said Carmouche and other trial lawyers have made legacy suits into a "cottage industry."

But Oliver Houck, a law professor at Tulane University, said the attacks on plaintiffs' attorneys are misdirected.

"What's wrong with a cottage industry, if it has the effect of getting stuff cleaned up, however slowly, and deterring bad conduct in the future?" Houck said. "That's kind of a nice cottage industry."

The case that started the craze

In fighting for reforms year after year, the industry and its backers focus on the 2003 Supreme Court decision that set off the legacy lawsuit craze. That decision, involving a Shell Oil well in Calcasieu Parish, upheld a $33 million remediation award - part of a larger $73 million judgment - for the landowners, the Corbello family, and said the family was under no obligation to use it for cleanup.

The land value was just $110,000. More than a decade later, the land still hasn't been cleaned up.

The reaction to Corbello led to changes in state law in 2006 that both sides now say they support - separating awards for damages and full restoration from the costs of basic cleanup; and requiring the defendant oil companies to clean up the property to minimum state standards, with the Office of Conservation overseeing the process.

But the new law, Act 312, has done little to speed up the process. In fact, the law had to be tweaked each legislative session since then.

One thing oil companies have never been able to do legislatively is prevent landowners from collecting damages beyond the cost of basic cleanup.

Glad Jones, whose New Orleans law firm represents landowners in about 20 legacy cases, says there's a good reason that the awards are often so much larger than the value of the damaged land.

"Oil companies, if they had done what they were supposed to do, they would have had to have taken that oil, taken that saltwater, to a storage facility," Jones said. "And they would have had to have paid to have dumped all of that in a proper facility, regulated by the state of Louisiana at $50-$100 a barrel, whatever the case may be. But instead, what they decided to do was leave it on the property and the landowner is going to have to deal with that forever."

Briggs says landowners and their attorneys throw up road blocks to make sure larger amounts of money go into their pockets, rather than into the cleanup account. But Corbello's trial lawyer, Mike Veron, of Lake Charles, said it's the oil companies that blocked the Corps of Engineers permit his clients sought to clean up damages to their wetlands in that oft-cited case.

The state's role

Houck, meanwhile, blames the state Office of Conservation for slow-walking enforcement of the cleanup plans.

"The same interests that control the Legislature control DNR. They're all one organism," he said. "They're not interested in cleanup. They're interested in getting out of the way of the oil and gas industry. That's the Huey Long bargain and it's been the bargain in Louisiana since the 1920s."

Houck said DNR is overtly supportive of the oil and gas industry and in promoting mineral production, so it has a conflict of interest in enforcing environmental regulations on the industry. The same sort of dynamic caused President Barack Obama to reorganize the federal Minerals Management Service after the Deepwater Horizon explosion off the Louisiana coast in 2010, with Obama saying MMS was "too cozy" with the industry.

Houck and many trial lawyers said the best agency to oversee environmental cleanup would be the Department of Environmental Quality, which enforces those regulations for everything but oil and gas activities.

But Patrick Courreges, a DNR spokesman, says there is no conflict of interest. He said the Office of Conservation acts as an independent regulator. Even though it's housed in DNR, the commissioner of conservation is not subject to DNR control, he said.

He also said Huey Long is long gone, and he said state regulators don't listen to oil companies that contend they didn't violate any regulations when the damage occurred.

"Look, it may have been within the rules at the time," Courreges said. But the Office of Conservation simply tells oil companies, "You can't just leave this. You've got some responsibility to clean this up."

Personal attacks, political gamesmanship

The distrust on both sides has made the issue increasingly personal and political.

Big money is spent on both sides trying to influence judicial elections. Oil lobbyists were out in force at the Capitol to influence last month's bill, which ended with Gov. Bobby Jindal calling it a compromise between landowners and oil companies.

But critics said the "compromise" was a ruse: The Louisiana Landowners Association counts four oil company owners or managers on its executive committee and Jimmy Faircloth, Jindal's former attorney who brokered the deal, is a registered oil company lobbyist.

Carmouche and his law firm, Talbot Carmouche and Marcello, handle about three-fourths of all legacy cases, and he's portrayed by the oil industry and its allies as the greediest of the bunch.

When Carmouche complained about being left out of the latest legislative effort to improve cleanup, Landry said, "We have ample evidence of abuse where they have been involved, so I can't image why it would make sense to include them in discussions about how to resolve that."

For his part, Carmouche has exposed embarrassing internal oil company documents from the 1930s through the 1980s showing that companies knew their unlined waste pits and toxic brines were causing environmental damage, acknowledged that state enforcement was "slack" and understood that they were exposing themselves to big lawsuits, but did nothing.

"The sad part is, who becomes the bad guy?" Carmouche said. "I go down to the Legislature and landowners, for suing oil companies, are called (for) filing frivolous lawsuits, committing fraud, holding oil companies hostage?"

Indeed, Jindal recently emphasized the idea that another legislative fix was needed to stop "frivolous" legacy lawsuits, even though there is already law in place to punish plaintiffs for bringing frivolous cases and no legacy case has ever been found in violation.

Nothing may capture the ludicrous nature of the impasse better than an arcane legal lecture given by a petroleum engineer in 2006.

Oil industry lobbyists and tort reform groups have used video clips of consultant Bill Griffin, the star plaintiff's witness in the first big legacy lawsuit, to allege a dastardly trial lawyer plot to raid Big Oil's "deep pockets" and unfairly blame them for damage they had nothing to do with.

Griffin even offers a PowerPoint with his "11-step plan on how to win this lottery."

The idea is that it's a real window into the way some trial lawyers build their cases, and it may be. But a little digging reveals that Griffin is actually speaking to a conference of oilmen and industry attorneys, and viewing the full, unedited video shows that Griffin has changed sides.

"I don't know how I'm coming across, but I actually defend these things," he says at one point, drawing relieved laughter from the pro-oil crowd.